TAO Token Tumbles: Bearish Market Sparks Speculation of Further Decline

Bittensor's TAO token has been facing a bearish market, despite initial gains. The token broke below key support levels, and analysts are now speculating whether it will head towards $390 or $216. TAO's volatility has increased over the past two weeks, coinciding with Bitcoin's trading range around the $100k mark. The lack of bullish conviction across the altcoin space has affected TAO, with its momentum remaining bearish since December.

TAO fell below the $354 support level but has since bounced higher. The Bollinger bands have been relatively wide since November, indicating increased volatility on the daily chart. The uptrend established in November was not maintained, and TAO has flipped its market structure bearishly. In January, the bulls ceded the $434 support level, and the $354 and $216 levels are now the next key levels to watch.

The 1-month liquidation heatmap showed a cluster of short liquidations building up around the $380-$400 region. This coincided with the local highs TAO reached during a recent dead cat bounce. The lack of demand and the overall bearish structure suggest that a rejection from the $400 resistance zone is likely. Swing traders may want to wait for Bittensor's test of that region before considering short positions.